J.P. Morgan\’s Dimon rapid fire take on profits (record), breakups and the press

At its annual meeting with investors on Tuesday, J.P. Morgan
saved the best presentation, and arguably the most enlightening, for last.

Chief Executive Jamie Dimon, who has received credit for steering the U.S. bank through the financial crisis, took the floor in mid-afternoon after all his top lieutenants had delivered detailed accounts on the major divisions of the bank. Read more on J.P. Morgan\’s investor day.

Reuters

James Dimon: Not ranting.

Dimon’s remarks weren’t so much a presentation as a rapid-fire stream-of-consciousness speech on, among other things, why he thinks J.P. Morgan rocks, why its bankers deserve to be paid top bucks, why the institution will meet all those pesky regulatory requirements, and why the bank’s low stock isn’t really something to worry about right now.

Praising the bank’s recent performance, Dimon said that trend will continue: “I’ll be damned if we don’t have record profits in the next year or two.”

J.P. Morgan, he said, is going to pay competitively. “We need top talent. You cannot run these businesses with second-rate talent.”

Dimon argued that it’s worth taking the risk of losing money in troubled European countries such as Italy and Spain because of the potential profits. In a presentation posted on its website, J.P. Morgan disclosed that its net exposure to Europe is $15 billion, with most of that in Italy and Spain.

On investment banking, a major revenue stream for J.P. Morgan, Dimon said that revenues are and will be volatile in segments like fixed income and equities.

He seemed perplexed that anyone would be surprised by that. “Why are you so surprised? It’s happened my whole life,” he said. “It will come back.”

As for regulatory reform of the financial sector, a particularly sensitive topic these days, Dimon said that some of the regulations are inconsistent, but “we are going to meet them all.” He then directly addressed the press in the room, just in case they had missed the point. “This is not railing or ranting,” he said. “We agreed with tons of reform. We disagreed with some of it.”

Dimon also answered several questions from the audience.

One person asked him whether he would consider splitting up J.P. Morgan as a way of reinvigorating the bank’s share price. Such a move, Dimon argued, would mean the loss of huge economies of scale. “The company would be much more valuable in 10 years rather than splitting it up in a whole bunch of different pieces [even if it’s trading at a discount today.]”

“Right now I don’t mind the low stock price,” he said. J.P. Morgan shares closed Tuesday up 0.4% at $39.21. They\’re up 18% this year but down 16% over the last 12 months.

As for share buybacks, he noted: “We are not going to buy back the stock at a high price,” but will do so at a “good price,” though he gave no specific number about what that may be.

No acquisitions are on the near-term radar, he said. “Right now we are out of the acquisitions game […] We have the least consolidative banking system on the planet.” He again turned to the press to ensure they were still listening and reiterated the last point.

After taking several questions, Dimon made it clear it’s time to wrap up.

“You’re all speechless?” he asked the audience, which included stock analysts and some journalists. “You’re all done? OK, we will talk to you all soon.” And then he thanked them all for coming.

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